I think that Wii sales have a lot more to do with demand at the moment and we'll see a larger impact from reduced Wii demand then we will from other system price drops.

 Well there was never a hefty amount of research done on that particular price point. The consoles that started at $300 last gen just dropped directly to $200. The mid-range is essentially un-explored territory and thus price drops into that range are a bit trickier to predict.

Wii will be at $150 and outsell Ps360 combined multiplied by 2.5

 Just like how the $399 price point was supposed to win it for the PS3? Care to elaborate on exactly why the $299 price point is such a big deal?

leo, what happened to your prediction for 2008 Wii sales? You know, the one that said they wouldn't go over 33m this year. I guess it's easy to make your predictions look good when you erase the bad ones...

My prediction for PS3 sales is clearly too low, but you don't see me pulling it from my sig.

Get ready for negative wii sales........due to the power of the cell (does anyone have any of those charts handy?)!

PS3 won't reach reach $275 until this gen is over.

360 at <$275 is irrelevant in Japan. 360 is going to struggle to hit 1million regardless

360 is trending faster than Xbox in the USA & Europe...at higher pricing. So it will see big increases when it drops. Probably enough for a 25m-30m in the Americas and 10-20m in Europe + a few million more in the rest of Others.

PS3 needs content to do well in Japan. GC was cheaper than PS2 in Japan. PS3 could do ~25k-30k/week for a year or two in Japan at peak.

PS3 in Europe with a price drop has alot of potential. PS3 could do 30m+ in Others

In the Americas, PS3 is still not matching 360 at comparable times from launch, so the price cuts will be to kick it into 360  sales territory but I think the timing is off for it to escape 3rd place in the Americas since new machines will be out when PS3 becomes under $300 completely.

Others is the one to watch on price drops impacting Wii sales as Japan is doing its usual 75-25 percent split, and since PS3 is going to have trouble catching 360in the Americas and since 360 is going to full further behind Wii for the forseeable future in the Americas.

I agree, and I personally believe that how the market responds to a console that is priced in the middle ground is heavily dependant on the ecconomic conditions ...

Most people will agree that a console that is $150 or less is inexpensive and a console that is $400 or more is expensive (both in terms of the console market), and everything in between is much more questionable. If you're in a market where credit is easy to get, unemployment is low, house and stock values are rising ('Magically' creating wealth) and so on people are going to feel pretty comfortable spending money or luxuries and a $300 console is going to be seen as being fairly affordable; in contrast if you're seeing falling employment, difficult to access and expensive credit, falling home and stock prices, and rapidly growing inflation anything over $200 is going to be seen as very expensive.

Anyways, the core of my post was ...

The disparity in the quality and quantity of videogame releases for the HD consoles and the Wii will never be as large as it was in 2007 ever again; the disparity is much smaller in 2008, and in 2009 and beyond the disparity could reverse (so the Wii is on top) with how everything is going. Much like the difficulties faced by the N64, Dreamcast, Gamecube and XBox it is very difficult to sell even a $100 console which does not have a large and rapidly growing library of great games that the dominant console typically has ...

To put this an entirely different way ... Consumers in the videogame market is a lot like attractive single women; they are not going to wait around for you to get into shape and to get your life together before they make their decision, you have a very limited time to sell yourself to them (warts and all) before they're taken. 

The point of a price drop that brings revenue per unit into the red is to artificially inflate the market with a product. But by going into the red they are basically producing a unit for free and then the console developer takes on the burden.

Hypothetically if Sony/Microsoft can generate their respective consoles at profit at $275 then what would happen?

Firstly the Wii will still be $250 by that point if it is still selling as fast as it is now.

The price drop won't have an impact on Wii sales directly unless Sony decides to coopt and are successful at doing so. But right now they are in a comfy space and in that hypothetical situation, you would see PS2 level sales on PS3. HOWEVER: The I believe their is a roof that was first attained by the Xbox360 of demand for those types of systems. It could be a number of factors, but as Xbox360 sales go down, PS3 sales go up and PSP sales go up - but it would seem for now that's probably due to direct competition. So no - unless they coopt.